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Student Accommodation Future in UK

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London stands alone as a huge draw to overseas students and thus the regional providers may see more of an impact from the raising of tuition fees. We as primarily a second year provider do operate in a different but related market, so this is our perspective from the 9 University locations in the UK where we operate.

The 2012/13 intake will decrease but not substantially given lack of other alternatives for the age group. Any decrease will not be evenly spread amongst all Universities. The Russell Group will still be oversubscribed, the "Red Brick" Universities may have to try harder, but some of the ex Colleges of Higher Ed and Polytechnics, degree course permitting, may experience difficulties.

Students will be more selective on their course choice as they now perceive they are paying for that service with or without parental contribution. Students will determine whether a University course will live or die and in some extreme cases whether certain Universities will survive.

This "value for money" approach will permeate to their accommodation choice after Halls for their second year. A Bank Manager has been quoted as saying that with the increase in fees," students will go back to their hovels", that is to say they will move from the shiny all-singing all-dancing en-suite halls back to cheaper basic student accommodation. There is an element of truth here but in reality most students see Halls as a preserve of only first years and foreign students. It is a right of passage to move on with friends to a house in multiple occupation or private apartment rather than hall environment. The perception that new-build halls will appeal to more savvy money conscious second years is flawed.

The larger student locations such as Leeds already have an over-supply of accommodation. Poorly located en-suite Halls in Leeds are suffering particularly at the present time with rents as low as £60 per week. Those halls completed after 2006 may also suffer from restrictive financing arrangements putting pressure on providers to annually increase rental.

Interestingly the recent increase in A level grades required for university admission has resulted in more out of town successful applications in certain locations thus increasing demand for accommodation.

Weekly rentals in the provinces above £100 pw are most at risk over the post 2012/13 letting periods. The most recent addition to the market of new-build student studio flats are considered generally expensive and rents will need to be reduced.

Our mantra has got to be value for money and affordability over the next 5-10 years. We are raising our standards with more robust hotel type furniture and boutique styling in our houses /new build apartment complexes. We do not see pressure on our rentals already significantly lower than first year provision halls and thus we are continuing to expand where yield and location are attractive.